The output at which two locations will have same profit. Introduction : Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

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Answer 1

Question

Chapter 8, Problem 19P

a)

Summary Introduction

To determine: The output at which two locations will have same profit.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

b)

Summary Introduction

To determine: The output at which location B will have high profit than location Mc.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

c)

Summary Introduction

To determine: The output at which location Mc will have high profit than location B.

d)

Summary Introduction

To determine: The break-even point of each location.

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Peggy Lane Corp., a producer of machine tools, wants to move to a larger site. Two alternative locations have been identified: Bonham and McKinney Bonham would have fixed costs of $780,000 per year and variable costs of $15,000 per standard unit produced McKinney would have annual fixed costs of $920,000 and variable costs of $13,800 per standard unit. The finished items sell for $30,000 each. a) The volume of output at which both the locations have the same profit = standard units (round your response to the nearest whole number). b) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Bonham is superior below c) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, McKinney is superior above d) The break-even point for Bonham is The break-even point for McKinney is units. (Enter your response rounded to the nearest whole number) units. (Enter your response rounded to the nearest whole number) standard…

Peggy Lane Corp., a producer of machine tools,wants to move to a larger site. Two alternative locations havebeen identified: Bonham and McKinney. Bonham would havefixed costs of $800,000 per year and variable costs of $14,000per standard unit produced. McKinney would have annual fixedcosts of $920,000 and variable costs of $13,000 per standard unit.The finished items sell for $29,000 each.a) At what volume of output would the two locations have thesame profit?b) For what range of output would Bonham be superior (havehigher profits)?c) For what range would McKinney be superior?d) What is the relevance of break-even points for thesecities?

Location Fixed Cost Variable Cost A $100,000 $10 B $150,000 $7 C $200,000 $5 600 Annual 500 Cost ($000) 400 300 200 100 2 4 6 8 10 14 16 18 20 Q (000s of units) i. Plot the total cost curves in the chart provided above and identify the range over which each location would be best. ii. Use break-even analysis to calculate exactly the break-even quantity that defines each range.

Answer 2

Question

Chapter 8, Problem 19P

a)

Summary Introduction

To determine: The output at which two locations will have same profit.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

b)

Summary Introduction

To determine: The output at which location B will have high profit than location Mc.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

c)

Summary Introduction

To determine: The output at which location Mc will have high profit than location B.

d)

Summary Introduction

To determine: The break-even point of each location.

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Answer 3

Question

Chapter 8, Problem 19P

a)

Summary Introduction

To determine: The output at which two locations will have same profit.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

b)

Summary Introduction

To determine: The output at which location B will have high profit than location Mc.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

c)

Summary Introduction

To determine: The output at which location Mc will have high profit than location B.

d)

Summary Introduction

To determine: The break-even point of each location.

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Answer 4

Question

Chapter 8, Problem 19P

a)

Summary Introduction

To determine: The output at which two locations will have same profit.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

b)

Summary Introduction

To determine: The output at which location B will have high profit than location Mc.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

c)

Summary Introduction

To determine: The output at which location Mc will have high profit than location B.

d)

Summary Introduction

To determine: The break-even point of each location.

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Answer 5

Chapter 8, Problem 19P

a)

Summary Introduction

To determine: The output at which two locations will have same profit.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

b)

Summary Introduction

To determine: The output at which location B will have high profit than location Mc.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

c)

Summary Introduction

To determine: The output at which location Mc will have high profit than location B.

d)

Summary Introduction

To determine: The break-even point of each location.

Answer 6

Chapter 8, Problem 19P

a)

Summary Introduction

To determine: The output at which two locations will have same profit.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

Answer 7

Chapter 8, Problem 19P

a)

Summary Introduction

To determine: The output at which two locations will have same profit.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

Answer 8

b)

Summary Introduction

To determine: The output at which location B will have high profit than location Mc.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

Answer 9

b)

Summary Introduction

To determine: The output at which location B will have high profit than location Mc.

Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.

Answer 10

c)

Summary Introduction

To determine: The output at which location Mc will have high profit than location B.

Answer 11

c)

Summary Introduction

To determine: The output at which location Mc will have high profit than location B.

Answer 12

d)

Summary Introduction

To determine: The break-even point of each location.

Answer 13

d)

Summary Introduction

To determine: The break-even point of each location.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 8 - Prob. 1ED Ch. 8 - Prob. 1DQ Ch. 8 - Prob. 2DQ Ch. 8 - Prob. 3DQ Ch. 8 - Prob. 4DQ Ch. 8 - Prob. 5DQ Ch. 8 - Prob. 6DQ Ch. 8 - Prob. 7DQ Ch. 8 - Prob. 8DQ Ch. 8 - Prob. 9DQ

Solution Summary: The author explains that location is an important element for a business that controls the cost and expenses. Location strategies support in framing other strategies.

To determine: The output at which location Mc will have high profit than location B.

To determine: The break-even point of each location.

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Chapter 8 Solutions